July 1, 2005
Online Banking: Are You Ready?
or check. If the payee is set up to accept electronic payments, your payment is automatically debited from the account you selected and deposited electronically into the payee’s account, just as if you had written a check. If the payee cannot accept electronic payments, your bank will issue a check based on the online payment instructions you provide. This transaction usually takes a little longer to complete, which is why a four-to-five-day grace period is recommended.
Tracking your payments: Naturally, you’ll want to make sure your online bill payments get processed correctly and on time. Most bill payment sites include a payment activity page that lists all of your payments and their status; scheduled, pending, or complete. Remember, in addition to the four to five days you should allow for your payment to reach the payee, it could take several more days for the payee to apply your payment to your account. For peace of mind, you may want to request that your bank send you an alert via e-mail, wireless device, or bank site to let you know when your payment clears.
Warning: Companies sometimes change their billing address or your account number without notification. It’s important to check the monthly statement from your financial institution to verify those details as well as your transactions. If a payee’s billing address changes, you could be hit with late fees. You may receive verification that a payment was made, but it may go to the wrong place or be credited to the wrong account.
Virtual banks, banking institutions without physical branches, are materializing on the Web at an astounding rate and they are offering something many brick-and-mortar banks can not—astounding rates! Virtual banks offer better deals on checking accounts, according to a study done by Bankrate.com, which found that the average yield at Internet banks is 1.05 %, compared to 0.27 % at traditional institutions. And in some cases, it is possible to see interest rates of up to 2.75 % on checking accounts.
Virtual banks offer other perks. An Internet account generally takes less time to set up and use; many offer free accounts, free transfers, and free payment cards. It’s even possible to combine virtual banking with online trading. In addition, virtual banks typically have fewer monthly fees. How do they do it? Well, obviously, virtual banks save on building branches and hiring massive numbers of employees.
However, there are some drawbacks. If you enjoy face-to-face interaction with a teller and the comfort of walking into a bank branch, Internet banking may not be for you. Most transactions will take place online or by phone. Bankrate.com also notes that it’s harder to make deposits at online banks. In most cases, they have to be mailed, which can be time consuming. And transferring money electronically from another account isn’t always possible with personal checks. ATM withdrawal fees can add up also because you’ll probably have to use another bank’s ATM.
To get more information about Internet banks, look into reputable brick-and-mortar institutions that have launched virtual companions